[GRRN] Exporting Waste to the Third World

RecycleWorlds (anderson@msn.fullfeed.com)
Tue, 18 May 1999 17:43:21 -0500

FYI the following article from the May 18 listserve issue of CORP-FOCUS (I
have no information as to the accuracy of the charge leveled by the
article's authors, Mokhiber and Weissman, at Treasury Secretary designee
Larry Summers) --

"Just between you and me, shouldn't the World Bank be encouraging more
migration of the dirty industries to the LDCs [least developed
So wrote Treasury Secretary-designee Lawrence Summers, then the chief
economist at the World Bank, in a 1991 World Bank internal memorandum
arguing for the transfer of waste and dirty industries from industrialized
to developing countries.
There's more: "I think the economic logic behind dumping a load of toxic
waste in the lowest wage country is impeccable and we should face up to
that. ... I've always thought that underpopulated countries in Africa are
vastly underpolluted; their air quality is vastly inefficiently low
compared to Los Angeles or Mexico City."
After the memo was leaked, Summers apologized, saying it was intended to
be ironic and that it was offered as a thought experiment. Later reports
suggest that someone else actually wrote the memo, although Summers' name
appeared on it.
But here is the question that remains unanswered, and that should be atop
the list of questions posed by the senators who have to confirm Summers'
appointment to replace outgoing Treasury Secretary Robert Rubin: "Ironic
or not, from your point of view, what was wrong with the logic of the
The notion that poor countries should import pollution and waste is just
an unsavory application of the economic theory of the U.S. Treasury
Department, shared also by the International Monetary Fund (IMF) and, to a
lesser extent, the World Bank.
In this worldview, poor countries should exploit their "comparative
advantage" of low wages, or access to natural resources, or lower
environmental standards.
While few countries have "developed" with this approach, it has proved
very effective for companies like Nike, which has taken advantage of low
wages throughout Asia, or even GM, which produces cars and trucks in
Mexico with the same technology as in Michigan but with lower-wage
workers. Makers of polluting technologies such as incinerators that are
being phased out in industrialized countries have also benefited, because
they are able to stay in business by selling to Third World countries.
U.S. manufacturers that wanted to escape environmental regulations (like
furniture makers who use toxic glues, solvents and paints) have
capitalized by shifting from places like Los Angeles to Mexico. For a
time, per Summers' suggestion, there was a thriving international trade in
toxic waste, but that has largely been eradicated, thanks to environmental
activists who helped get enacted a global treaty to ban hazardous waste
exports from rich to poor countries (the United States has not signed).
At the heart of the Treasury-IMF-Bank approach is the idea that developing
countries should concentrate their effort on exports, rather than
production for local needs. A related core idea is that countries should
allow foreign capital to move into and out of the country without
Those two policy prescriptions contributed in significant measure to the
Asian economic crisis, which was precipitated by a sudden withdrawal of
foreign capital from Asian markets, itself a result in part of
over-investment in production for export.
The solution of Summers, Rubin and Federal Reserve Chair Alan Greenspan
(anointed the "Committee to Save the World" by Time Magazine) was for
Asian countries to do more of the same (while making some internal
financial reforms and shutting down or selling off bankrupt enterprises).
Again, multinational corporations and foreign investors are doing well.
U.S. firms like Fairchild Semiconductors, Hartford Life and GE Capital,
for example, have made unprecedented purchases of Korean assets.
The overall result of the Committee's global financial crisis management,
according to most news accounts including the many beatifying Rubin
following his retirement announcement, has been a steadying of the
economic crisis. In fact, while stock prices are now rising in the Asian
countries, so is unemployment and poverty.
Unemployment in South Korea rose from a tiny 2.6 percent to more than 8
percent and climbing. More is coming, according to IMF projections.
Indonesia's economy shrunk by 15 percent in 1998. More than a half million
Indonesian children have died from malnutrition since the crisis began.
The country's poverty rate has soared to at least 40 percent.
There is, too, massive environmental destruction stemming from the crisis
-- a bleak fulfillment of sorts of the Summers memo's prescription. In
Thailand, for example, devaluation and the export emphasis has led to more
agricultural exports and the expansion of shrimp farming, which the Asian
Development Bank says is causing "destruction of wetlands and increased
salinity of rice lands." Illegal logging is leading to further erosion and
The trouble with Larry Summers and his memo is not that it was an
aberration stemming from a lapse of good judgment. The trouble is that it
Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime
Reporter. Robert Weissman is editor of the Washington, D.C.-based
Multinational Monitor. They are co-authors of Corporate Predators: The
Hunt for MegaProfits and the Attack on Democracy (Common Courage Press,
(c) Russell Mokhiber and Robert Weissman
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Peter Anderson
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